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July 2, 2013

Administration Delays Obamacare Employer Mandate

Grants additional year for companies to comply, citing 'concerns about the complexity' for businesses to implement

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The Obama administration announced Tuesday that a requirement of the Patient Protection and Affordable Care Act set to take effect in 2014 will be delayed “an additional year.” The provison, known as the "employer mandate," requires employers with more than 50 full-time workers to provide health benefits or face penalties and fines.

The new heath care law has come under fire in recent months for its confusing guidance and projected cost overruns. Retiring Sen. Max Baucus, D-Mont., who helped write the law, warned it was headed for a “train wreck” during a budget hearing on April 17 that featured Health and Human Services Secretary Kathleen Sebelius. A report released last month from the Government Accountability Office also pointed to challenges in opening the federal insurance exchanges on time.

“We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively,” Mark Mazur, the Treasury Department’s assistant secretary for tax policy, said in a statement. “We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so. We have listened to your feedback. And we are taking action.”

Business groups were jubilant The Associated Press said. “A pleasant surprise,” Randy Johnson, senior vice president of the U.S. Chamber of Commerce, said. There was no inkling in advance of the administration's action, he added.

“We commend the administration's wise move,” said Neil Trautwein, a vice president of the National Retail Federation. It “will provide employers and businesses more time to update their health care coverage without threat of arbitrary punishment.”

These reasons are designed to meet two goals, Mazur added. First, it will allow the administration to “consider ways to simplify the new reporting requirements consistent with the law.” Second, he said, it will provide time to adapt health coverage and reporting systems while employers are “moving toward making health coverage affordable and accessible for their employees.”

Within the next week, formal guidance will be published “describing this transition.”

The statement provided additional detail, including:

The ACA includes information reporting (under section 6055) by insurers, self-insuring employers and other parties that provide health coverage. It also requires information reporting (under section 6056) by certain employers with respect to the health coverage offered to their full-time employees. Mazur said the administration expects to publish proposed rules implementing these provisions this summer, after a “dialogue with stakeholders” – including those responsible employers that already provide their full-time work force with coverage far exceeding the minimum employer shared responsibility requirements – in an effort to minimize the reporting, consistent with effective implementation of the law.

Once these rules have been issued, the administration will work with employers, insurers and other reporting entities to strongly encourage them to voluntarily implement this information reporting in 2014 in preparation for the full application of the provisions in 2015. Real-world testing of reporting systems in 2014 will contribute to a smoother transition to full implementation in 2015.

“We recognize that this transition relief will make it impractical to determine which employers owe shared responsibility payments (under section 4980H) for 2014. Accordingly, we are extending this transition relief to the employer shared responsibility payments. These payments will not apply for 2014. Any employer shared responsibility payments will not apply until 2015,” Mazur said

“During this 2014 transition period, we strongly encourage employers to maintain or expand health coverage,” he concluded. “Also, our actions today do not affect employees’ access to the premium tax credits available under the ACA (nor any other provision of the ACA)."